Calculating Time Off In Lieu of Payment
The concept of Time Off In Lieu ("TOIL") allows an employee to work overtime, and then instead of being paid additional remuneration for working such overtime, the employee is granted paid time off work by their employer, to the equivalent of the overtime worked.
In relation to TOIL arrangements, modern awards can be separated into three categories:
1. TOIL is calculated at the employee's ordinary rate (i.e. ‘an hour off for an overtime hour worked’);
2. TOIL is calculated at the employee's overtime rate (i.e time and a half for the first two hours, and double time thereafter);
3. The award is silent on TOIL (i.e there is no provision in that award that regulates TOIL arrangements).
As part of the Commission's reveiw of modern awards, a model TOIL term has been finalised and is to soon be inserted into most modern awards. The model term will regulate agreements reached by employees and their employer in taking TOIL instead of receiving payment for overtime. The model term will require that, in relation to all TOIL agreements or arrangements:
- the employee and employer agree to take TOIL at a mutually-agreed time;
- TOIL will be taken within six weeks of the overtime being worked. If this does not occur, the overtime is to be paid to the employee at overtime rates;
- a separate written agreement is to be made for each occasion that overtime is to be taken as TOIL;
- any accrued, but untaken, TOIL must be paid to the employee on termination at overtime rates; and
- if requested by the employee, the employer must pay the employee for any accrued but untaken TOIL entitlement at overtime rates.
Despite the above, any modern award that currently allows TOIL to be calculated at the employee's overtime rate (i.e time and a half for the first two hours, and double time thereafter) will remain unchanged.
Fair Work Centre will advise all Members of when modern awards are amended to include the model term referred to above, and we will also prepare a 'TOIL Agreement' document for use by Members.
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